Impacts of intellectual property right protection on ASEAN exports: GMM Estimator

SOGANG IIAS RESEARCH SERIES ON INTERNATIONAL AFFAIRS 99

Volume. 12, December 2012, pp. 99~125

Impacts of Intellectual Property Right Protection

on ASEAN Exports: GMM Estimator

Nguyen Khanh DOANH

Tran Dinh TUAN

Abstract

This paper aims at analyzing the impacts of IPR protection in

foreign countries on ASEAN countries’ exports using the system

GMM estimator. Our results are robust and summarized as

follows. First, reinforced IPR protection in foreign countries has

a positive effect on ASEAN’s exports, indicating the dominant

of market expansion effects. Second, stronger protection of IPRs

induces ASEAN’s exports to foreign countries regardless of their

level of development. Third, the trade impacts of IPR protection are

found strongest in high-income countries, followed by medium￾income and finally low-income countries. Efforts to increase the

GDP, improve social infrastructure, accelerate domestic reforms

(openness to trade) and importantly strengthen IPR protection

in foreign countries are suggested as a remedy for obstacles to

ASEAN’s exports.

Keywords: Intellectual Property Rights, Imitative Ability,

System GMM Estimator, ASEAN.

 Vice-Rector, Associate Professor, Thai Nguyen University of Economics and Business

Administration, Vietnam. E-mail: [email protected]



Ph.D., Thai Nguyen University of Economics and Business Administration, Vietnam.

E-mail: [email protected]

100 Nguyen Khanh DOANH / Tran Dinh TUAN

I. Introduction

Over the last decade, the trade impacts of intellectual

property right (IPR) protection have been debated in international

trade literature. On the political front, IPR protection acting as a

form of trade barrier has become an issue of global concern.

According to developed countries, the protection of IPRs is

particularly necessary because their investors who have made a

considerable investment in technology development must get a

fair return. Therefore, they called for multilateral rules and

enforcement of IPRs. On the contrary, a number of developing

countries have been arguing in favor of a weak IPR regime.

According to them, non-protection of IPRs on their part only

had a minimal impact on producers from the developed

countries, and stronger protection of IPRs would increase the

profitability of foreign firms at the expense of domestic

producers. For this reason, their welfare and development

prospects would be harmed (Hoekman & Kostecki, 2001).

In the academic arena, there has been no unified agreement

on the relationship between IPR protection and international

trade flows. Although the linkage between IPR protection and

international trade flows is evidenced in the literature, the

nature of the linkage between them has been the potential

source of much debate and controversies. To explain how IPR

protection affects international trade flows, several theoretical

works have been put forward. However, they are unable to

predict the direction of the impacts because the strengthening of

IPR protection could have two countervailing effects on

international trade flows (Maskus, 2000; Maskus and Penubarti,